[Nevermark]

> If you want a store in a mall [...]

If any global entity owned such a large percentage of malls that suppliers had little choice but to appear there in order to be competitive, and charged for mall use via a general tax on original and follow up economic activity (instead of in proportion to mall resources used), requiring products be registered with them, and copies of direct and follow up sales records, many people might protest that too.

[dann0]

Have a look into Westfield / Scentre.

I think a large part of the disagreement here is the idea that all digital things should be free compared to how the physical world has been forever.

To sell to a hardware store, for example, you need to offer the retailer 40% as a minimum. Then you need to pay, often compulsorily, trading terms, ranging fees, advertising levies and other off invoice things.

They have high costs to cover, but they also force shelf prices down as much as they can.

In my opinion, Supermarkets and hardware stores mis-use their market power way more than Apple appears to be doing

[Nevermark]

I take your point. Commercial real estate companies can abuse their market position too!

But Apple's (duopoly level) gatekeeper status on global/mobile applications, services, information and transactions is allowing them to hold back an enormous amount of latent innovation.

Shelf space is important and necessary for many businesses, but that isn't where tomorrow's world is being crafted.

[dann0]

Oh, I’m not a blind supporter of Apple. They absolutely could be much less arrogant and handle this and many other things much better.

However, the entitlement that is pervasive here that whatever Apple does is bad and it’s ok to expect them to give their work and infrastructure away for free is just crazy.

If we’re arguing about the value that developers get for what they pay, or if Apple is stifling innovation, or even if Apple is being maliciously compliant, then that’s a different conversation. I’m much more sympathetic to that.

But this is about people demanding Apple give their IP away from free so that they can make money from that expensive to make and operate infrastructure is ridiculous

[Nevermark]

I don't think anyone believes Apple shouldn't be able to set normal supply and demand optimized product and service fees.

But Apple owns one of only two global mobile app, service and info platforms, and so has tremendous power to limit and veto other businesses opportunities. Few businesses that need to operate in those ecosystems can be viable only operating in one of them.

And Apple is using that tremendous leverage to do two things normal businesses can't do.

Both of which damage the larger economy.

1) It is gatekeeping fundamental technological and business innovation. Apple limits the types of technology and business models that it will allow on its platforms, in favor of its own versions, or in favor of simply not enabling innovation it finds competitively threatening.

It is very difficult for new innovation on the margins to succeed starting out unable to participate in half the marketplace.

2. It has enough veto power over businesses, that it is able to tax other businesses' success, instead of charging for the value of its products and services to them. I.e. Apple charges a percentage of other businesses product and service revenue - instead of flat charges for its security checks, app listings, etc. Apple charges a percentage of follow up revenue, even if the transaction happens elsewhere. Apple charges a percentage on revenue of transactions that don't even require Apple's assistance or participation but were initially enabled by being on Apple's platform. It even charges a percentage of revenue for fourth parties it has no relationship with, such as for transactions by participants on third party markets, like digital art creators!

No normal business could extend taxes on other's productivity like that, to multiple levels of extraction, independent of productive value provided. They would be rapidly replaced by a competitor happy to make profits set by supply and demand, instead of taxes imposed by the ability to deny (or seriously hamper) entry to a strategic global market.

[dwaite]

> But Apple owns one of only two global mobile app, service and info platforms, and so has tremendous power to limit and veto other businesses opportunities. Few businesses that need to operate in those ecosystems can be viable only operating in one of them.

However, it is important (from a capitialism angle at least) to realize Apple has never falsely represented things. They have not done a bait and switch. They launched with their 30% commission rate on agency-model pricing almost 15 years ago (for apps, which was the same commission rate for music before that), and every change in licensing terms has been either enabling new transactions that were otherwise restricted, or by offering lower rates - such as for certain types of financial transactions, or certain business sizes.

They have also tended to do this with public policy changes rather than unilateral arrangements, although there are some partner programs around tvOS which are pretty tailor-built such that few companies would be able to take advantage of them.

And it is worth noting that they launched first as a platform for web based apps, and when you filter web technologies to actual standards (and not Google inventions) they tend to fight between first and second place with Chrome on actual interoperability.

Companies recognize the marketing value of having a native app within the App Store vs just a normal website. Apple obviously does as well.

> Apple charges a percentage of follow up revenue, even if the transaction happens elsewhere.

Note this is only true via 'new terms' to allow for steering toward alternative payment systems. Apple has always allowed you to operate your own out-of-store payment system (e.g. signing up for a Netflix account on the Netflix site, or purchasing kindle books on kindle.com) without paying them any commission.

However for most consumer apps (e.g. non. 'reader' apps like music, video, books and news) you had to provide a way to purchase in-app using Apple's system.

Many of these reader apps have played with in-app subscriptions off-and-on, which would make an interesting case study as they have been the category actually capable of deciding whether or not in-app purchasing was worth offering. Other categories are mandated.

[Nevermark]

> However, it is important (from a capitalism angle at least) to realize Apple has never falsely represented things.

I also feel like Apple has generally attempted to be well behaved, even as their market power has grown exponentially from a couple decades ago.

They are not the devil. But they are have reached a level of market breadth and power, that behavior not problematic even a few years ago is now an impediment for the market as a whole.

They deserve kudos for their success.

If they don't contort and distract themselves from more productive advances, by prioritizing holding onto leverage that has become too heavy handed for those they serve (and partner with), they are likely to become an even better company.

Microsoft has done fantastically well since giving up Ballmer's scorched Earth, Windows only philosophy. Ironically, if they had given up that control obsession sooner, focusing more on improving Windows shortcomings, they might have skipped the stall associated with that era and be even more dominant now.

[charcircuit]

>in order to be competitive

Businesses should exist in malls to make a profit not to "be competitive". If it isn't profitable or the return on investment isn't worth it then they should not exist at that mall. It's the mall's fault if they charge too much and start to lose businesses to other malls and in turn lose visitors who would rather visit other malls.

[Nevermark]

I agree with that. At the individual business decision level.

But relatively fair competition is still a necessary component at the scale of an economy. If we are to retain any approximation of equality, equity and not hamper innovation.

If someone somehow owns the only viable commercial water supply for a city block, they can demand whatever they can get from any business on that block that needs water. And each business should make good decisions for itself in that context.

But if someone owns all the commercial water supply for a city, people are going to take political action to alter the economic equation if it starts leveraging that capability to the general cities detriment.

[charcircuit]

Alternatively someone could start up their own commercial water supply business if other businesses feel their only option is unfair. By acting poorly towards businesses the original company would have messed up their long term market share for a short term profit.

[freedomben]

As a result of the way water rights work in most areas, this is likely not true. You aren't allowed to use the water even if it runs right through your property if you don't have water rights.

You could maybe import water through trucks or trains or something from somewhere else, but the costs for that would be brutal. Then the incumbent can bankrupt you instantly by undercutting your price, and then hike it back up as soon as you're gone. The Robber Barons in the 19th century used this very tactic frequently in anti-trust situations to hamper competition

[charcircuit]

That would make this a poor analogy as anyone can create their own hardware + software ecosystem.

>Then the incumbent can bankrupt you instantly by undercutting your price

This could be mitigated by longer term contracts so you are guarenteed a certain amount of payment to make it worth your time before the other company lowered their prices to start competing.

[Nevermark]

Obtaining water rights in some other locale, and piping it into a town some way, is probably easier than competing against a trillion dollar entrenched tech ecosystem.

But the water system, or general utility problem, is interesting for many reasons.

Dual sets of infrastructure double the supply costs for a critical input like water, without actually increasing the supply that nature provides.

The solution to keep costs and prices down is then generally to give (or accept) a water supply monopoly, but with price regulation. That is the common solution to avoid price gouging in that monopoly situation.